The KDM Dairy Report 5/27/2024



It has been a couple of weeks sense the last report and in that time we hit new highs on the spot market and in the futures.  Now the market is starting to settle back down.  From the production report April was down 0.4 percent and cow numbers were 74k less than last year.  These are typically bullish numbers but there was a little buy the rumor before the report and sell the fact after.  Then Friday cold storage came out and it was slightly up from last month which added fuel to the sell off.  All put together June class 3 futures had a $2 sell off this last week.

Weekly Spot Prices
Weekly Future Prices

Cheese: Production schedules are steady to stronger throughout the U.S. In the East, cheese production schedules have held steady despite flattening milk production at the farm level. Contacts relay high domestic cheese prices have hindered export demand.  Cheesemakers in the Central region say milk availability is in line with recent weeks, with spot prices settling at $6-under to $0.50-under Class III. Cheese demand remains strong. Contacts relay some barrel cheesemakers in the region have also started producing curds and other seasonal cheese varieties. In the West, cheese production remains strong. Milk volumes available to Class III processors are
tightening, but contacts anticipate school breaks to free additional milk supplies in the near term.  (USDA Cheese Highlights)

Butter: Domestic butter demand continues to vary from steady to strong across the country for both the retail and food service sectors as we approach the upcoming holiday weekend. Industry participants note cream volumes are comfortable and generally available. That said, some stakeholders anticipate cream to begin seasonally tightening by mid-June. Butter production is mixed with some plant managers conveying scheduled downtime in connection with the holiday weekend right around the corner. Stakeholders indicate unsalted bulk
butter is tight for spot load buyers.  (USDA Butter Highlights)

Dry Whey: Prices were unchanged this week for both the range and mostly price series. Domestic demand is steady. Demand from international purchasers is moderate. Liquid whey from cheese production is readily available for sweet whey and whey protein concentrate manufacturers to utilize. Dry whey production schedules range from strong to steady. Manufacturers report mixed availability of loads for spot buyers. A few manufacturers indicate their spot load availability will be tight through much of Q3. That said, loads are available  to accommodate buyers’ immediate and near-term need.  (USDA Dry Whey)

With cold storage holding level the cheese market seems to be in balance.  The panic buying on the spot market has calmed down and the futures’ prices have come back down closer to what the world market is at.  I think the market can bounce around in this range for a little while.  Recommendation is sell the rallies (prices near or above $21) and take profits or buy calls on the drops (prices near or below $19).